Delisting and Other Rule Amendments by The Stock Exchange of Hong Kong Limited

In May 2018, The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) published the conclusions to the consultation paper in September 2017 which sets out amendments relating to the delisting framework under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for both the Main Board and GEM (the “Amendments”).

The purpose of the Amendments was to establish an effective delisting framework which facilitates timely delisting of issuers that no longer meet the continued listing criteria and provide certainty to the market on the delisting process. An effective delisting framework would also incentivize suspended issuers to act promptly towards resumption, and provide a deterrent effect against issuers from committing material breaches of the Rules. This would address the issue of prolonged suspension of trading in issuers’ listed securities, and was in the interest of maintaining the quality and reputation of the Hong Kong market.

Major amendments to the Listing Rules include:

  • Added a separate delisting criterion to allow the Stock Exchange to delist an issuer after its continuous suspension a prescribed period (18 months for Main Board and 12 months for GEM).
  • Specified a new delisting process of which The Stock Exchange may (i) publish a delisting notice and give the issuer a period of time to remedy the relevant issues to avoid delisting, or (ii) delist the issuer immediately in appropriate circumstances. This new process applies to all the existing delisting criteria in Main Board Listing Rule 6.01.
  • Removed Practice Note 17 to the Main Board Listing Rules as the new delisting process will also apply to issuers without sufficient operations or assets previously covered by the practice note.
  • Proposed transitional arrangements for issuers whose securities are under suspension immediately before the effective date of the Amendments, and other minor Rule amendments relating to delisting.
  • Proposed separately a number of Rule changes relating to the suspension requirements, in the interests of keeping trading suspension to the shortest duration possible.

The amended Main Board and GEM Listing Rules have taken effect from 1 August 2018.